Is automation improving the financial markets?

Technological developments and the rapid advancement of technology around the world have changed the way many industries operate. The finance industry has not been excluded; it has gone through some major changes in the past decade.

financial markets

New technology has meant new regulations and there has been a variety of market challenges and competition to contend with. The latest digital revolution, which some are citing as the beginning of a fourth industrial revolution, has had a significant impact on the way customers interact with businesses and what they expect from businesses. Automated technology, such as robotics, is one of the major technological developments which is having an impact on industries around the world and financial markets.

Uses of Automated Technology

Many industries around the world are investing heavily in robotics and automated technology to improve the function of their business. Huge technology giants, such as Amazon and Facebook, are leading the way in terms of investment into robotics. Investment into new automated technology has resulted in the movement towards entire factories which are able to produce products, transport them and manage the production line without any human intervention. This technology is set to have a huge impact on the world’s economy in the future, with many people looking at robotics as one of the hottest investment opportunities of the year.

Automation has many purposes in the financial industry. High transaction volumes and strict regulations are essential to the success of the industry, which means that value is placed on an organisations ability to make operations efficient and make sure that they are controlled. The technology can be used to keep records of journal entries, perform transactions and maintain data. In terms of financial risk management, robotics can also detect risk exposure. This can make it possible for organisations to save time when compiling risk reports as automated technology can create accurate and detailed checks and reports on data and even take actions to address any issues.

Forex Trading and Automation

Forex trading, which some may know as FX or foreign exchange, has risen in popularity in recent years. The global market for world’s currencies is the largest and most liquid market in the world at the moment. On an average day, trading volume can exceed $5 trillion. For day traders and individuals who have recently begun trading at home, automated Forex trading can be beneficial. This is where traders make use of automated technology, known as a Forex robot, to find the best trading opportunities. The robot works by using an algorithm to scan the market. However, as with any form of trading, success is not always guaranteed. Users should be careful when selecting which Forex trading robot to use to ensure they are making the best decision to suit their needs.

What Effect is This Having?

Automated technology has a number of uses to improve the ways businesses and financial service industry operates. However, it can also improve the quality of the financial markets and could potentially improve the economy as well as people’s day-to-day lives. The broad range of impacts which will be felt as robotic technology becomes commonplace has been discussed in depth.

In terms of the financial sector, these impacts are varied. As previously mentioned, high frequency trading is essential for the success of financial service businesses. At present, the increasing pace of trading is meaning that automation is almost essential for the continued growth and development of the financial industry. Industry experts have found that high frequency trading can improve the quality of the market and can decrease spreads, although this is not always the case. They have also found that trading via an automated algorithm is increasing the price efficiency and high frequency trading can reduce short-term volatility within financial markets. Despite this, there is no evidence to suggest that high frequency trading can prevent unexpected market crashes and the long-term impact on market volatility has not yet been established.

The future is set to be a very turbulent time throughout the financial sector and the increasing use of automated technology is highly likely to have a dramatic impact on the world’s economy. Other industries will also feel the impact of this technology, as automated machinery becomes able to undertake a range of jobs and roles in warehouses and customer service operations. We may even see automated technology integrating into our everyday lives, if the development of self-driving cars is successful. The full extent of the challenges and changes that we will see as a result of an increasing amount of automated technology is not yet known but it is certainly an exciting time as we enter this new digital era.

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